5.10 Accounting for Refining and Petrochemical Operations
Operations in the oil and gas industry are broadly divided into two, namely upstream and downstream.
Refining and petrochemical production are therefore part of the downstream. Crude oil, which is the major raw material of a refinery, is a mixture of a family of organic chemical compounds made up of hydrogen and carbon in various proportions called hydrocarbons. The non-hydrocarbon materials that are usually present in crude oil are sulphur, nitrogen, nickel, vanadium, and other metals or salt which is usually in quantities less than one in a thousand. The distinguishing feature of a mixture (as distinct from a compound) is that in a mixture the components retain their individual characteristics and can be separated fairly easily. Crude oil almost has unlimited possibilities as a raw material.
The key drivers of profitability of refineries are:
1. Quality of Crude: A company that buys light crude will be more profitable. Light crude is crude oil with API gravity that yields a high proportion of the lighter, more valuable products after refining.
2. Conversion Capacity of Refinery Plant: A more complex refinery will produce a higher total value of products from a given crude oil even though the total quantity will be reduced through the greater use of fuel for process heating.
3. Other factors that affect refinery yields are (a) Direct costs and yields
(b) Lead times for receipt of crude oil (c) Storage considerations
(d) Spot markets considerations etc.
5.10.1 Types of Refineries
Refineries are classified according to their conversion capability. Refineries consisting of atmospheric distillation units, reforming and hydro-treating units are often referred to as hydro-skimming refineries.
Those with any substantial units for changing the basic yield pattern of crude oil barrel through catalytic or hydrocracking are referred to as complex or conversion refineries.
5.10.2 Petroleum Refining Processes
Refining may be defined as a means of producing fuels and lubricants, among others. Basically it involves vaporizing crude oil by heating it to a high temperature, collecting the resulting gases and condensing them back to a liquid state. Crude oil refining comprises of a series of interrelated processes, all involving heating, and each producing several products. Some of these products can be put to end use without further processing while others have to undergo considerable post-production refining, further cracking, reforming, synthesis and molecular arrangement. Refinery operations are carried out in different processing units that follow one another in processing sequence. Basic refining processes are:
i. Primary process or physical separation process (Crude distillation) ii. Secondary or conversion processes
iii. Treating processes iv. Blending
Primary Process (Crude Distillation)
The objective of distillation is to separate the many compounds contained in crude oil into groups of similar compounds. The principle underlying this process is the fact that different liquids vaporize at different temperatures (called boiling points). The separation of low and high boiling points materials in this way is called fractional distillation (fractionation).
The process is accomplished by running the crude oil through a number of pipes lining a brick furnace (heater/boiler). The crude oil is heated to a temperature of approximately 800o F after which it rises to the top of the furnace as vapour and is then transferred to the fractionation tower. The points at which they start to boil are called Initial Boiling Points (IBP) and where they stop boiling is called End Boiling Points (EBP). At the EBP, the product would have been completely vaporized.
The fractions produced from this atmospheric fractionation towers can be used in their new state, blended with other substances or further processed to make useful products. The maximum temperature at which hydrocarbons can be separated in the atmospheric tower is 900oF. Steam keeps the oil hot and low pressure allows the hydrocarbons to vaporize at temperatures below their cracking points enabling them to be separated into fractions. The light and heavy gas oils are separated from the heaviest residue.
The primary process separates the various fractions, which may serve as inputs for the secondary process.
These inputs are otherwise known as “charging stocks”. The term “charging stock” refers to unfinished products that are to be further processed in some secondary refining operation. These secondary processes either result in new products or bring primary products to required quality standards. The intermediate products, in order of increasing boiling range, are listed below.
(a) Fuel gas -to refinery fuel gas - below 100°F
(b) Light straight run gasoline - to sweetening and then to gasoline blending (Boiling range 100°F-200°F).
(c) Heavy straight - run gasoline -to hydrogenation, to catalytic reforming and then to gasoline blending (Boiling range 200°F-400°F).
(d) Middle distillates — to kerosene, jet fuel, furnace oils, diesel fuels (Boiling range 350°F-600°F).
(e) Catalytic cracking charge — to fluid catalytic unit charge (Boiling range 450°F -750°F).
(f) Fuel residue — vacuum distillation unit. (Boiling range about 700°F)
Table 19: Refinery capacity in OPEC Members by type and location (1,000 b/cd)
Source: OPEC Annual Statistical Bulletin, 2013 Pp 36-37
Table 19: Refinery capacity in OPEC Members by type and location (1,000 b/cd) Continue
Source: OPEC Annual Statistical Bulletin, 2013 Pp 36-37
Table 20: World refinery capacity by country (1,000 b/cd)
Source: OPEC Annual Statistical Bulletin, 2013Pp 38
5.10.3 Petrochemicals
A petrochemical is a chemical substance produced commercially from feedstock derived from crude oil or natural gas. Petrochemical plants are usually integral parts of large refining complexes and often subsidiaries of major oil companies. Their function is to turn outputs of the refining process either in form of crude oil fractions or their cracked or processed derivatives into feedstock that will ultimately be used in the manufacture of a host of other products e.g. plastics, resins, synthetic rubbers, printing ink, paints, acid, fertilizers, detergents, etc.